Theo over at the Inq took a couple days & put a web rumor to the test. It turns out that NVIDIA's hardware does indeed fail to fully comply with SM3.0, but then again, neither does the X1K line from Canada...

"The best part is, ATI's Xbox 360 GPU dubbed Xenos fully supports the missing feature. Vertex Texturing is even used in Xenos presentations as one of the strengths of that unified architecture. But X1K will have none of it."